Jubilee Mines NL v Riley: Examining Director Duties & Disclosure Law

This case study provides an in-depth analysis of the Jubilee Mines NL v Riley [2009] WASCA 62 case, focusing on the director's duties and continuous disclosure obligations under Australian corporate law. The case revolves around Riley, a shareholder and former director of Jubilee Mines, who claimed damages due to the company's failure to disclose information about a nickel discovery on one of its tenements. The analysis covers sections 180-184 and 191 of the Corporations Act, 2001 (Cth), which pertain to the duty of care, good faith, use of position, and use of information by directors and officers. The court's decision, which overturned the initial ruling in favor of Riley, emphasized that the materiality of undisclosed information should be assessed in the context of the directors' intentions and its significance to a prudent shareholder. This case highlights the importance of continuous disclosure requirements under ASX Listing Rule 3.1 and provides guidance on how directors should evaluate whether information is market-sensitive and requires disclosure to the ASX. The document also contains references to various articles and case laws related to the topic.

J U B I L E E M I N E S N L V
R I L E Y [ 2 0 0 9 ] WA S C A 6 2
(Group Details: )

I N T R O D U C T I O N
The Corporations Act, 2001 (Cth) is the most important legislation for
any company in Australia.
This legislation covers nearly all the aspects of the companies and sets
out basic guidelines on how the companies are to be managed.
One of key aspects given under the quoted legislation is the director
duties. These duties have been set out under Part 2D.1 of this
legislation (Williams, Bingham and Shimeld, 2015).

I N T R O D U C T I O N
The director duties cover duty of good faith, use of position
and use of information, amongst the other duties.
Where these duties are not followed by the directors or the
officers on whom these duties are levied, both civil and criminal
liabilities can be raised for the breaching person, depending
upon the particular section being contravened (Latimer, 2016).

I N T R O D U C T I O N
This legislation not only offers punishments but also puts
forth defences where the spirit of quoted legislation is
followed, along with the words of the law.
This discussion is mainly focused on the application of
director duties as had been found in the case of Jubilee Mines
NL v Riley [2009] WASCA 62.

B A C K G R O U N D O F C A S E
Riley was a shareholder and a director of Jubilee
Company, which was basically a small listed gold
exploration company (Duffy, 2012).
Even though he had resigned from the post of
director in 1993, he continued to be a shareholder of
the company.

B A C K G R O U N D O F C A S E
During the mid part of 1994, presence of nickel was
identified while drilling was being done on a Jubilee tenement.
The managing director and geologist of the company made a
decision that the company would carry out no further
exploration at this particular tenement of company as the
focus of the company was on the gold related activities only.

B A C K G R O U N D O F C A S E
This was done without the co-directors of company being informed
or the ASX being informed of this decision, despite nickel having
being found at this tenement (Lavan, 2009).
The disclosure of drilling results was made after some years to the
ASX.
By that time, Riley had sold off his shares ignoring the nickel data.

B A C K G R O U N D O F C A S E
He then claimed to have suffered damages as a
result of the company being in contravention of the
continuous disclosure requirements with regards to
this nickel discovery.
It was contended by Riley that even though the
results of drilling did not highlight or present
commercially significant nickel resource.

B A C K G R O U N D O F C A S E
He claimed that only the resulted had been
indicated in the results but there was a lack of
potential for a further exploration of nickel being
stated.
This led to his claims in the court, which initially
were presented before the trial court and later on
were appealed (Lavan, 2009).

B A C K G R O U N D O F C A S E
This involved contentions being raised against
directors for breaching their director duties, for not
carrying out the proper disclosures (CCH Australia,
2009).

D U T I E S B R E A C H E D A N D R E A S O N S
F O R I T
Section 180: civil obligations of care and diligence
Section 181: civil obligations of good faith
Section 182: civil obligations of using the position
Section 183: civil obligations of using the information
Section 184: criminal liabilities
Section 191: disclose all the material personal interest

D U T I E S B R E A C H E D A N D R E A S O N S
F O R I T
Even though all these sections were not directly quoted in this case, the
theme of these sections were applied in this case.
This is particularly true in context of section 183 of this legislation.
For the reasons of listing rules which were applicable in this case, the
company got awareness regarding the information, which the executive
officer or the director of company reasonably came in possession of, while
they were performing the duties laid down under this legislation.